The biggest thing in the news these days is the "Stimulus Package" that is supposed to go a long way toward helping the United States out of the current economic depression. Now, before I go any further, allow me to briefly explain my political leanings. I am not a Democrat, and I am not a Republican. If you have to shoehorn me into a political ideology, I guess I'm more of a Libertarian than anything else. I say that just so that you don't read this and say "Oh, he just doesn't like it because Obama supports it." I don't like the stimulus bill because it's a terrible bill, but that's the whole point of this post. Anyway...
First, some facts:
As of February 11, 2009, the total federal deficit was $10,713,124,215,572.20. Yes, that's 10 TRILLION dollars. (That number is from the U.S. Treasury Department, Bureau of the Public Debt).
The population of the United States is currently estimated at 306 million people, not including illegal aliens (give or take).
This means that the federal deficit is about $35,010.21 per person.
The U.S. government doesn't make money. Yes, they print the money and mint the coins, but that's not what I'm talking about. The government can't just say, "We need more money," and print more money. The largest source of income for the federal government is income taxes. We have forgiven the debts that other countries owe us, and we allow countries like China and Mexico to import their goods under free trade, so we're not getting any income from those sources.
Now, on to the stimulus bill:
As of this writing, the "compromise version" is being discussed in the halls of Congress. The House version of the bill totaled $819 BILLION in spending and tax cuts/credits. The Congressional Budget Office (CBO) is a nonpartisan committee that analyzes the spending of every bill being considered by Congress. According to the CBO, only $182 billion of that money (or 22%) is in the form of tax cuts/credits (the Democrats claim it's 1/3 of the money, but they include tax credits given to people who don't pay taxes, and that money is more accurately counted as an expenditure). The other $637 billion (78% of the total) is pure spending. Well, guess what? That money has to come from somewhere. Hmm...where could they get that money? They certainly don't have it in the budget. No other countries owe us that money. We can't raise tariffs to raise the money. Well, I guess we'll either have to borrow it from other countries, or we'll have to raise taxes. But wait, aren't we getting tax cuts and credits in this stimulus bill? So how are we going to get the money to pay for all this? We're not...we're going deeper into debt because of it.
Okay, so we're in this depression partly because of irresponsible spending by consumers, who are now way over their heads in debt, defaulting on mortgages that they never should have gotten in the first place, and the federal government wants to "stimulate" the economy by INCREASING spending and therefore INCREASING the federal deficit? Wait, I know...if you increase spending in the right areas, you can stimulate the economy, right? Maybe. I'm no economist, but I can see how maybe using some of this money to help people pay off debts would stimulate the economy because then they could purchase new goods to help out the companies that are struggling. Okay, that's where the tax cuts/credits come in (more on that later), but what about the other 78% of the money in the bill? Well, the CBO has made a handy-dandy little chart to show where the spending goes. I'll touch on some highlights, but you can see the whole thing here.
http://www.washingtonpost.com/wp-dyn/content/graphic/2009/02/01/GR2009020100154.htmlNow, some details on the spending. As you read these, I ask you how spending in this area is going to stimulate the economy. There may be some things here that you think are good and necessary for other reasons (like spending $900 million for hybrid and electric cars for federal employees), but I ask you how these things will stimulate the economy. All of these numbers are taken from the House version of the bill. Ready?
$5.5 billion to make federal buildings "green"
$198 million to design and furnish new headquarters for the Dept. of Homeland Security
$200 million to enhance workplace safety in Dept. of Agriculture facilities
$75 million for the Smithsonian Institution (which no one can visit because they can't afford the trip to D.C.)
$412 million for CDC headquarters
$300 million for FBI office buildings
$1 billion for administrative costs and construction of National Oceanic and Atmospheric Administration office buildings
$125 million for the Washington, D.C. sewer system (It's unclear whether this is a euphemism for Congress or the actual sewer system.)
$850 million for Amtrak (When's the last time anyone went anywhere by train?)
And so on, and so forth...
So again, I ask you, how is this supposed to stimulate the economy? Okay, maybe by spending all this money for construction and all, the contractors will make money, and they'll have to purchase supplies, which will help the building supply stores, and we'll be purchasing all these hybrid cars, so the automakers will have to make a bunch more of them...wait...automakers.
In case anyone hasn't noticed, the auto industry is in the tank, and just saying you want to purchase a bunch of hybrids isn't going to help them. Has anyone seen the numbers from Ford lately? Ford's best-selling auto now, and for a long time, has been the F-150. Ford spent all this money gearing up for hybrids, and no one bought them. So now Ford is changing all their hybrid assembly lines to truck assembly lines so that they can make a car that will actually sell. So where are they supposed to get the money to increase hybrid production to make all these cars for the government?
One other little tidbit that I bet you missed. Back on February 4, Congress voted to give themselves more money. Now, they can't vote on a salary increase for themselves, but what they did was increase their petty cash for daily spending by $93,000 per year, PER MEMBER OF CONGRESS. There are currently 535 members of Congress, so that's $49,755,000 EVERY YEAR that has to come from somewhere.
So, President Obama, Congressmen and Congresswomen, and all the talking heads on TV are telling us that Americans need to be more frugal; we need to stop frivolous spending, save our money, invest in American companies when we can, etc. Yet here Congress is trying to spend over $600 billion dollars THAT WE DON'T HAVE! How does that make sense? How is that going to help us out of this economic depression? How?
Short answer: It won't. There is NO WAY that we can pull ourselves up by the bootstraps if all we're doing is going further into debt. The government HAS to get that money from somewhere, and it's going to come from every Tom, Dick, and Harry that pays taxes. So, WE are going to foot the bill for this, and WE are the people it's supposed to help.
Nope, this stimulus plan is really nothing but a spending plan. Not only is it not going to help us out of this depression, but it's likely to make it a lot worse before it's over. Look, I'm not an idiot, I know that SOME spending is necessary, but the programs and areas that this spending is for is not going to help you and me one little bit.
In less than 18 days, Congress (with the full support of the Obama Administration) has spent over $1.1 TRILLION and vastly expanded the federal government. Again, how does that help?
You know what would help? You know what would do the most to help this economy grow? Here's Paul's "Stimulus Plan":
#1 - Eliminate the corporate income tax. Before you get upset, understand this...corporations DON'T pay income taxes. Oh sure, they have to file a tax return and send money to the IRS, but guess where that money comes from? It comes from you and me in the form of higher prices for goods. Eliminate the corporate income tax, and the price of goods will decline. That's a good thing.
#2 - Relax some of the government regulations on businesses. Will that cure everything? No, but like eating food and drinking water are fundamental to the health of the body but won't cure the common cold, eliminating the corporate income tax and relaxing regulations will feed our economy more than anything else. We can live with sneezes and hiccups in the economy, but not if we're starved by choking off productivity/affordability. Why is it so hard to fathom that NOT holding the economy back with taxes and regulations allows it to grow?
#3 - Lower personal income taxes across the board. No "middle class" tax cut...no "upper class" tax cut...just a tax cut...PERIOD. This immediately places more money in our pockets in the form of less withholding from paychecks. We then use that money to pay off debt, purchase new goods, or invest...or all three. Then we can take advantage of #1 and #2 above to help get this economy going again. Besides, the government won't need all that tax money anyway because they won't have all this corporate oversight and regulatory committees that need funding, right? If that still doesn't provide the federal government with enough money to operate, then we'll just have to cut federal spending some more. I propose we start with the $49,755,000 Congressional petty cash increase.
Alright, I have to stop now. My head hurts.
Comments welcome.
